A sophisticated and ruthless trading scheme has resulted in a multi-million dollar loss for the Hyperliquid exchange. In a classic case of Hyperliquid whale manipulation, a single trader executed a pump-and-dump on the POPCAT memecoin that exploited the platform’s automated systems.
Hyperliquid Whale Manipulation Scheme Triggers $4.9M Loss on POPCAT Memecoin
The whale orchestrated the maneuver by withdrawing $3 million in USDC from OKX and distributing it across 19 separate wallets to hide their intent, a common tactic to avoid detection before a major market move.
The Mechanics of the Hyperliquid Whale Manipulation
The attack was methodical. The trader deposited the funds into all 19 wallets on Hyperliquid and opened massive long positions on POPCAT. To create artificial demand and inflate the price, they placed buy orders worth approximately $20 million at $0.21 per token, forming a colossal buy wall. This manipulative action successfully pumped the price, and the trader’s positions ballooned to $30 million. Then, in a sudden move, the whale removed the buy wall, causing the price of POPCAT to instantly collapse. This triggered a cascade of liquidations across all 19 wallets within seconds.
How the $4.9M Loss Hit the Hyperliquid Provider (HLP) Pool
This is where the Hyperliquid whale manipulation had a systemic impact. According to Hyperliquid’s automated market design, its Hyperliquid Provider (HLP) pool acts as the counterparty to all trades and absorbs losses when user positions are liquidated. In this case, the HLP pool was forced to cover the trader’s massive losses, resulting in a $4.9 million hit. This single event wiped out an amount equivalent to three months of profits for the entire liquidity pool.
Platform Response and Broader Market Impact
The Hyperliquid team acted swiftly to contain the damage, closing the remaining losing positions and temporarily pausing its Arbitrum bridge to prevent further fallout. Reassuringly, other operations on the platform were unaffected. Despite the exploit, the platform’s native HYPE token showed resilience, trading up 0.65% at $39.72. The incident also caused widespread liquidations in the broader market, with over $63 million in long positions wiped out in a 4-hour window. In a separate bullish development, Hyperliquid Strategies filed with the SEC to raise up to $1 billion, with proceeds intended to accumulate HYPE tokens.
My Thoughts
This incident is a stark reminder of the risks inherent in decentralized and semi-decentralized finance, especially with highly volatile memecoins. While Hyperliquid’s systems managed to contain the blast radius, the exploit highlights how sophisticated actors can game automated mechanisms. For the ecosystem, this underscores the critical need for robust risk management and surveillance systems to detect coordinated manipulation. It’s a costly lesson, but one that will likely lead to stronger defenses.
